Chapter 6 and 7 Problems Please complete the following 8 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the...

Chapter 6 and 7 Problems
Please complete the following 8 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.
Chapter 6 Exercise 2
2. Schedule of cash collections
Sugarland Company sells a single product and anticipates opening a new facility in Charlotte on May 1 of the cu
ent year. Expected sales during the first three months of activity are: May, $60,000; June, $80,000; and July, $85,000. Thirty percent of all sales are for cash; the remaining 70% are on account. Credit sales have the following collection pattern:
Collected in the month of sale
60%
Collected in the month following sale
35
Uncollectible
5
a. Prepare a schedule of cash collections for May through July.
. Compute the expected balance in Accounts Receivable as of July 31.
Ans. Schedule of cash collections for May through July
    Particulars
    May
    June
    July
    Sales
    60,000
    80,000
    85,000
    Cash Sales (30% of sales)
    18,000
    24,000
    25,500
    Credit Sales(60% sales in same month)
     25,200 (1)
     33,600 (3)
     35,700 (5)
    Credit Sales (35% in next month)
    
     14,700 (2)
     19,600 (4)
    Total Cash collections
    $43,200
    $72,300
    $80,800
Working notes:
1. Credit sales collection for May in the same month = (60,000 – 18,000) *60% = 42,000 *60% = 25,200
2. Credits sales collection for May in following month = 42,000* 35% = 14,700
3. Credit sales collection for June in same month = (80,000 – 24,000) * 60% = 56,000 *60% = 33,600
4. Credits sales collection for June in following month = 56,000 * 35% = 19,600
5. Credit sales collection for July in same month = (85,000 – 25,500) * 60% = 59,500 * 60% = 35,700
2. So amount left to be collected for month of July = (59,500 * 35%) =$20,825
SO, the expected balance in Accounts Receivable as of July 31 = $20,825
This balance has been calculated by excluding the uncollectible portion of 5% which is categorized in bad debts account
Chapter 6 Exercise 4
4. Production and cash-outlay computations
RPR, Inc., anticipates that 120,000 units of product K will be sold during May. Each unit of product K requires four units of raw material A. Actual inventories as of May 1 and budgeted inventories as of May 31 follow.
    
    1-May
    31-May
    Product K (Units)
     55,000
     60,000
    Rate Materials A (Units)
     40,000
     37,000
Each unit of raw material A costs $8; RPR pays for all purchases in the month of acquisition. Invoices that account for 80% of the cost of materials acquired will be paid within 10 days of receipt, entitling the company to a 2% cash discount.
a. Determine the number of units of product K to be manufactured in May.
. Compute the May cash outlay for purchases of raw material A.
Solution:
a. number of units of product K to be manufactured in May = 120,000 – 55,000 + 60,000 = 125,000
. May cash outlay for purchases of raw material A = 125,000 * 8 = 1,000,000 – 2% = 980,000
    
    July
    August
    September
    Beginning cash balance
    $10,000
    $ ?
    $ ?
    Add: Cash receipts
    50,000
    63,000
    71,000
    Deduct: Cash payments
    -64,000
    -58,000
    -64,000
    Cash excess (deficiency) before financing
    ($4,000)
    $ ?
    $ ?
    Financing
    
    
    
    Bo
owing to maintain minimum balance
    ?
    ?
    ?
    Principal repayment
    ?
    ?
    ?
    Interest payment
    ?
    ?
    ?
    Ending cash balance
    $ ?
    $ ?
    $ ?
Chapter 6 Exercise 5
5. A
eviated cash budget; financing emphasis
An a
eviated cash budget for Big Chuck Enterprises follows.
Big Chuck wishes to maintain a $10,000 minimum cash balance at all times. Additional financing is available (and retired) in $1,000 multiples at a 12% interest rate. Assume that bo
owings take place at the beginning of the month; retirements, in contrast, occur at the end of the month. Interest is paid at the time of repaying principal and computed on the portion of principal repaid.
a. Find the unknowns in Big Chuck's a
eviated cash budget.
. Determine the outstanding loan balance as of September 30, after any repayments have been made.
    
    July
    August
    Septembe
    Beginning Cash Balance
    10,000
    14,000
    10,000
    Add: Cash Receipts
    50,000
    63,000
    71,000
    Deduct: Cash payment
    64,000
    58,000
    64,000
    Cash excess (deficiency) before financing
    (4,000)
    19,000
    17,000
    Financing
    
    
    
    Bo
owing to maintain minimum cash balance i.e. 10,000
    14,000
    ---
    ---
    Principal repayment
    ---
    7920(9000- 1080)
    4400( 5000 – 600)
    Interest repayment
    ---
    1080(9000*12%)
    600(5000 *12%)
    Ending cash balance
    14,000
    10,000
    12,000
Assuming interest 12% is per month.
Loan taken as at July = 14000 so as to maintain a balance of 10,000
Loan balance left as at August 31 = 14,000 – 9000 = 5000
There is no loan balance outstanding as at September 30 as all repayments have been made maintaining a minimum cash balance of 10,000 at the end of September.
Chapter 6 Problem 3
3. Comprehensive budgeting
The balance sheet of Watson Company as of December 31, 20X1, follows.
    WATSON COMPANY
    Balance Sheet
    December 31, 12X1
    Assets
    
    
    Cash
    
    $4,595
    Accounts receivable
    
    10,000
    Finished goods (575 units x $7.00)
    
    4,025
    Direct materials (2,760 units x $0.50)
    
    1,380
    Plant & equipment
    $50,000
    
    Less: Accumulated depreciation
    10,000
    40,000
    Total assets
    
    $60,000
    Liabilities & Stockholders' Equity...